Bitmine’s Ethereum staking push set to generate over $160M a year

Bitmine Immersion Technologies will use its massive treasury of Ether to generate a new stream of revenue, as its Ethereum staking position could bring in more than $160 million in annual revenue at current market rates.

The company has added 40,302 Ether in the last week, increasing its total holdings to 4.24 million ETH. It also increased its balance of ETH held in staking by 171,264 over the last week, bringing the total to more than 2 million ETH.

Bitmine stakes more Ether to earn a steady income

Bitmine is increasing the amount of Ether it stakes as it seeks to make its vast crypto reserves a regular source of on-chain income. It does this by using the Ethereum staking mechanism to earn rewards on the cryptocurrency.

Currently, the amount of Ether that Bitmine has staked could bring in around $164 million annually, given the company’s 2.81% Composite Ethereum Staking Rate (CESR) and the price of Ether at the time of the report.

CESR measures the average yearly earnings that validators on Ethereum accumulated. It is a widely used standard for measuring stakeholder performance.

Bitmine has invested more than half of its total Ether holdings, doing so faster than most public crypto treasuries. This demonstrates a clear shift towards actively earning yields.

Chairman Tom Lee said the company can see significant earnings growth if it continues to expand its staking business. He said that staking all of Bitmine’s Ether would yield annual staking revenue of $374 million, or more than $1 million per day, assuming the same staking rate. 

Bitmine will work with multi-party staking firms to spread the risk involved with its bold plan and increase the amount of Ether present on the blockchain. The company will also launch its own validator setup in the U.S. this year as part of the next phase in its staking plan.

Companies use Ether staking to earn money

Ether staking is one of the most common strategies for companies with large crypto treasuries. More firms are looking for regular income from their ETH while maintaining exposure to the network.

What Bitmine’s plan illustrates is a shift in the digital asset space. Rather than holding their Ether as a value that goes up and down with the market, companies with treasuries are increasingly opting to stake their ETH to receive rewards directly from the network.

Bitmine also claims it has $682 million in cash, 193 Bitcoins, and some minority equity holdings, for a total of $12.8 billion in crypto and cash. Yet Ether is still the dominant holding.

Bitmine now holds 3.52% of the 120.7 million ETH in circulation, underscoring the company’s determination to increase its influence in the industry. The company plans to hold 5% of all the ETH.

Other companies are using similar concepts and reaping success. SharpLink Gaming, the second-largest Ether treasury company, reported earning 10,657 ETH, or $33 million, in staking rewards. SharpLink has accumulated 864,840 ETH, according to CoinGecko, and has been earning rewards for 7 months.

However, this trend is expanding to other companies beyond these two. In June, Bit Digital announced its plan to cease or sell its Bitcoin mining business and invest in a larger Ether position.

Currently, the company has 153,546 ETH in reserve and only six Bitcoins, indicating a change in strategy. About a month after the announcement, Ether Machine disclosed plans to roll out a publicly traded yield-focused Ether fund targeting institutional investors. The company has now become the third-largest Ether treasury, holding 496,712 Ether.